Jeremy's Financial Planning Blog

Does it always seem that your money never goes as far as it should? One of the main culprits are the slow money leaks that we all have. These are generally recurring monthly expenses for a subscription or service that by itself appears quite small, but when you factor in dozens of these potential leaks, it can drain hundreds of dollars from your budget each month.

Examine Your Memberships and Subscriptions

How often are you using that gym membership that you signed up for in January as part of your New Year's resolution to get into shape? Memberships like these can actually be quite costly and if you aren't getting the full use out of the service you are probably throwing money away.

Another good example are the video rental services such as Netflix or Blockbuster. How many movies do you actually receive per month versus what plan you are on? Do you really need to have 3 videos out at one time? If you watch even one or two movies per week you can likely get by on a lesser plan and that could save five bucks a month.

Entertainment Subscriptions

It is no surprise that television and internet services can be very costly. Some households can spend upwards of a few thousand dollars a year on TV and internet service. Take a good look at what your true needs are and find out what cuts can be made. Do you really need that $5-$10 a month premium movie channel? How about the super deluxe platinum package with 500 channels when you only watch a handful of channels?

Even if you find you do want some premium service, you generally don't have to subscribe to it year round. If you want the sports package to catch your favorite college football team do you really need to pay for that package from February through July? Or maybe you subscribe to HBO because you're a die hard Sopranos or Entourage fan. Again, these types of shows don't generally run new episodes year round, and you could save a lot of money by only signing up when you actually want to catch the shows.

Finally, even if you feel you can't make any cuts, you can still save money with a quick phone call. Just like a quick phone call to your credit card company can lead to a lower interest rate, a quick call to your cable or satellite provider may result in receiving a special price for six months. It's worth a try, and it never hurts to ask.

Add It All Up

Remember, the little things add up. Saving $5 here and there may not seem like much, but consider what some small savings amount to over time. Save $5 by changing your Netflix subscription, cancel that $20 a month gym membership you rarely use, reduce your cable bill by $20 and get rid of a few magazines you don't have time to read, and you may realize a monthly savings of $50 or more dollars.

What does $50 a month actually buy you? That could pay a utility bill, an additional $600 going into your retirement account, or work towards building your emergency fund. Another $600 a year applied to the principal of a high-interest credit card can also put a nice dent in that debt you've been trying to eliminate. Whatever the case may be for you, use that as motivation to cut back on these financial leaks that can slowly drain your bank account.

For almost a year now, the Fed has slashed the key fed funds rate from 5.25% all the way down to the current 2%. This is a fairly significant drop in a short amount of time, and while rates aren't expected to continue to drop, the Fed won't likely increase the fed funds rate as drastically as it was cut. This means the relatively low interest rates should be around for a while.

Good for Debt, Bad for Savings

Lower interest rates are good for borrowing money since it means you will be paying less in interest. The bad news is that the Fed rate cuts don't directly translate into lower rates for consumers. These cuts can take many months before the effects are felt on your bottom line, but you can begin shopping for lower rates now. Once you can begin to benefit from the lower rates, you'll have more money in your pocket as less is being spent on interest payments.

While lower interest rates saves you money when borrowing, the opposite is true when you are saving money at the bank. As interest rates fall, the rate of return on your checking, savings and CD accounts will likely follow suit. If you enjoyed the comfortable savings rates during most of 2007, you're probably not very excited as many rates have now dropped below the rate of inflation. If you can, make sure you're getting the best rate possible and explore other banks to ensure you're getting as much interest on your savings as possible.

• How to Plan for Lower Interest Rates
• What Are Interest Rates?
• The Federal Reserve and Interest Rates

I will be attending a wedding this weekend, and it reminded me of how costly and stressful planning a wedding can be. There are so many things to buy or rent, and people to invite, so it is no wonder the cost of a wedding can get out of control so quickly. The first thing you need to do when planning your wedding is to put things into perspective and prioritize the most important things. Some aspects of the wedding may largely be forgotten as soon as it's over, but others may be with you or shared with others for decades to come. Knowing what is most important to you can help you focus on where it pays to save.

Typical Budget Breakdown

The average wedding budget is broken down something like this:

• 40% on food, cake, and alcohol
• 3% on the facilities for the reception
• 8% on flowers
• 10% on entertainment
• 14% on clothing
• 7% on a photographer
• 4% on invitations and other printed supplies
• 4% on gifts
• 2% on transportation
• 8% on miscellaneous items

To help you get a better idea of what your budget is and how much should be spent on the various categories, make sure you check out the wedding budget worksheet. If you plan ahead and focus on the most important aspects, you can have an affordable wedding.

Are you confused by all of the health insurance terminology out there? What' is an HMO? How is it different from a PPO? Which plans allow you to choose your own doctor? These are all common questions people have when looking to purchase their own individual policy, or even choosing between employer-sponsored offerings. Not all plans are created equal, and some may provide a cost benefit, but not allow you flexibility in choosing doctors, while others may give you ultimate flexibility that comes at a premium.

When the time comes to make that important decision on which type of health insurance to choose, it pays to learn about the different types of health insurance policies so you can make the best decision for you and your family.

We're still many months away from tax season, but that doesn't mean you shouldn't do any tax planning today. One of the easiest things you can do to maximize how much you bring home with each paycheck and avoid paying Uncle Sam too much is to adjust your tax withholding. Did you receive a large refund this year? If so, that means you were having too much money withheld from your paycheck. Sure, it's always nice to get a check in the spring, but you're really just giving the IRS an interest-free loan when you could have been making use of those extra dollars.

Having proper withholding isn't just for controlling refunds, but it is even more important if you find yourself on the other end of the stick and need to write a check to the IRS come April. Nobody likes shelling out more money for taxes, so having your withholding set up appropriately can prevent this. It is a fine line to walk in order to put as much money in your pocket without having to pay up at the end of the year. Luckily, the IRS can help you determine how to set your withholding. Check out the IRS withholding calculator.

It's that time of year again when high-school grads head off to college, and most college students head back to school. This means finding money for tuition, room and board, books, and spending money. College can be expensive, so finding the funds to pay for it all can be quite a task. Luckily, for many people, there are various sources of financial aid that can assist in making this a reality.

There are a various forms of financial aid available, from federal grants and scholarships, private loans, and federal student loans. These sources of funds can ease the burden on both parents and students. Another alternative which may have attractive tax benefits is the Section 529 Plan. These plans allow you to invest money tax-deferred and realize the gains tax-free if used for qualified expenses. Not only that, but many states even provide tax credits for making contributions into these plans. And don't forget, even many U.S. savings bonds are eligible for tax breaks when used for college expenses. So, make sure you check out all of the options available to you.

Depending on who you ask, you'll hear some people claim that in just a few decades Social Security will be nowhere to be found, will be means-tested, or may even be plugging along just like it should. If you ask me, I wouldn't put too much faith into Social Security if you're still relatively young. Whether or not it will be there, or how much it will pay out is anyone's guess, but that doesn't matter. Social Security was never meant to provide someone's entire retirement, so it should have little effect on your long-term planning and saving goals.

Like health insurance, which was never intended to pay all of our medical expenses, but rather to share the cost and prevent financial hardship caused by catastrophic illness, Social Security was never intended to be the only source of retirement income. In fact, for the average person, Social Security benefits will be approximately 40% of what you were earning before retirement. Do you think you could live on 40% of your income with the constantly increasing health care costs, taxes, and inflation? I didn't think so.

Your best bet is to assume the worst, and whatever Social Security you do receive can just be a bonus. That means you should continue to contribute as much as possible into your 401(k)or 403(b) plan through work, or your Traditional IRA or Roth IRA. These investment vehicles put you in complete control so you don't have to hope the government will be there to help you out in retirement.

Most people save for retirement in their employer-sponsored plan such as a 401(k) or 403(b) plan, but these plans provide up-front tax deductions and tax-deferred growth. While this can be a great feature, the problem is that the money will still be taxed as ordinary income upon withdrawal in retirement. If tax rates are lower, or you're in a lower tax bracket when this happens, that is ideal, but what happens when you find that taxes are higher upon retirement?

This is where a Roth IRA can come in handy. Unlike the employer-sponsored plans and its cousin, the Traditional IRA, qualified withdrawals from a Roth IRA are tax-free. You don't get the benefit of a tax deduction on the contributions since they are made with after-tax dollars, but the money still grows tax-deferred, and in most cases, can be withdrawn in retirement completely free from taxes. This is great for situations where tax rates may increase in the future as you'll avoid being heavily taxed on those withdrawals.

Now, this isn't to say that one type of retirement plan is better than another, but both pre-tax and tax-free accounts have their advantages. It is typically a good idea to have retirement money in both types of accounts so that you're diversifying your tax liabilities and can structure your withdrawals in a way that minimizes your tax burden both now, and in the future. Take a moment to learn more about the Roth IRA.

If you've been paying attention to your recent investment statements or listen to the media at all, you're well aware of the fact that most markets are experiencing some tough times. There is no exact definition of a bear market, but generally when investors and economists are pessimistic of the direction of the market and the economy, and markets see a 20% or more drop in the span of a few months, it is for all intents and purposes, a bear market.

For some, this means scrambling to make changes to their investments, and others may even pull out of the market completely. While this may lead to short-term safety of principal, if you're investing for the long-term, it can actually do more harm than good. So, it is important to understand what your investment objectives are, your risk tolerance, and the time horizon for the funds. Only then can you decide what, if any action to take. Here are some tips on how you can weather a bear market.

On August 5th, 11 people were indicted for allegedly hacking into major retailer's computer systems and stealing 40 million credit and debit card numbers and passwords. Generally, credit card numbers are at risk when shopping online via an insecure website, but this time, your data may have been at risk even if you swiped your card while personally inside a retail store. The investigation has been ongoing since 2006, so information may have been obtained as long as a few years ago.

The Stores Affected

• Marshall's
• T.J. Maxx
• BJ's Wholesale Club
• OfficeMax
• Boston Market
• Barnes & Noble
• Sports Authority
• Forever 21
• DSW

What You Can Do

First, pay attention to all of your credit card and checking account statements. Be on the lookout for suspicious activity. Second, you should probably get a free copy of your credit report. There are no indications that this data was used for opening new accounts of identity theft purposes, but you should b e checking your credit report once a year anyway. And third, if you're really concerned, you could call the company that issued your card and cancel the current card and request a new one. With the old card invalid and a new number established, you can help protect possible future fraudulent activity.

Sometimes, your data can be at risk without you even knowing it, and it could be completely out of your control. Even so, it always helps to follow some basic tips on how to prevent identity theft. And if the thought of people obtaining your information like this bothers you, there is always the option of using cash. Not only does using cash prevent hackers from stealing your data, but it could even help you cut back on overspending.